Love Limbo in Shanghai as Singles Frozen From Home Market

Unmarried non-locals, who had been able to buy as long as they proved a year or more of tax payments, are now being frozen out altogether after the city toughened implementation of the curbs following Chinese Premier Wen Jiabao’s vow in July to “unswervingly” contain prices. Photographer: Kevin Lee/Bloomberg

Aug. 16 (Bloomberg) -- Tank Zhao is being forced to ditch
tradition by taking a bride before buying a home as Shanghai
bans unmarried non-locals like him from purchasing property.

The 28-year-old software engineer from Fujian province had
been looking for an apartment ahead of plans to marry his
girlfriend next year, in accordance with the Chinese proverb
“Zhu Chao Yin Feng” -- build a nest before attracting the
phoenix. He’ll now have to secure the phoenix before the nest.

“The policy is unreasonable; we aren’t speculators, we
just need a place to live,” said Zhao. “Getting married first
goes against our culture. I’ll have to explain to my
girlfriend’s family that the Shanghai policy is what it is.”

Shanghai last year started limiting locals to owning two
homes, while families among the city’s 9 million non-local
residents were capped at one. Unmarried non-locals, who had been
able to buy as long as they proved a year or more of tax
payments, are now being frozen out altogether after the city
toughened implementation of the curbs following Chinese Premier
Wen Jiabao’s vow in July to “unswervingly” contain prices.

Chinese males are expected to own a home before they
approach their would-be wife’s family for approval to wed. In
rural parts of the country, parents extract most of the family’s
wealth to build houses for their sons ahead of the marriage; in
cities, securing an apartment is the equivalent.

New-home prices in China fell for nine straight months
through May as government restrictions achieved the goal of
cooling the market, according to SouFun Holdings Ltd., the
country’s largest real estate website owner. In July, values
bucked the trend, posting the biggest gain in more than a year,
SouFun said Aug. 1.

Stop Rebound

“China’s property policies will definitely focus on those
first-tier landmark cities,” said Alan Jin, a Hong Kong-based
property analyst at Mizuho Securities Asia Ltd. “If all the
current curbs are not working, the government may have to be
more hawkish in the second half. Their bottom line is to stop
prices from rebounding.”

After stricter implementation of its curbs, Shanghai’s new
home sales fell 16 percent in July from a month earlier to 7,025
units, according to data from Century 21 China Real Estate, the
country’s second-biggest property brokerage. Sales had surged 24
percent to 8,365 units in June, the highest in 17 months.

“The policies did have some impact on the market,” said
Huang Hetao, Shanghai-based researcher at Century 21.

China’s second-largest city by population, Shanghai had
about 23 million residents at the end of 2010, about 9 million
of whom were non-locals, according to the nation’s statistics
bureau. An influx of construction, information technology, and
other workers almost tripled the cost of homes in Shanghai in
the past 10 years, according to government data.

‘It’s Discrimination’

Zhang Lei, a blogger from eastern Zhejiang province who has
lived in Shanghai for eight years, has set up a “non-local
singles anti-purchase restriction alliance” online. The 31-year-old, who says she doesn’t plan on ever getting married, was
ready to pay a deposit for a 3 million yuan home ($471,000) in
northern Shanghai in June, she said. Then the government
crackdown nixed her plan.

“This is very, very irritating; it’s discrimination,”
said Zhang, who boasts more than 110,000 fans at Sina Weibo,
China’s Twitter-like microblog portal. “I’ve been making money
and waiting for the time that I can finally buy a home. Then all
of a sudden the government told us that we couldn’t buy.”

Non-Chinese people are allowed to buy one home in Shanghai
as long as they show proof that they don’t own other properties
in the country and have been employed for a year. Overseas
companies are allowed to buy offices in the city if they are
registered, according to the housing ministry and currency
regulator.

Shanghainese Chauvinism

“We pay our tax here and make contributions to the city’s
development, the same as locals and foreigners,” Zhang said.
“Why is it just us that can’t buy?”

Shanghai, with its own dialect, has some of China’s
strictest population controls. To be defined a “local,” one
must be born in the city to Shanghainese parents, be a skilled
professional with residence of at least seven years and tax
receipts to prove it, or marry a Shanghai local and remain
married for 10 years.

The residency policies fuel chauvinism by Shanghainese
against newcomers and reinforce divisions between the two groups,
said Wang Xiaoyu, an associate professor and social critic at
Shanghai’s Tongji University.

“Had the policies been based on tax payments, it would be
closer to concepts of citizens’ rights,” he said. “Instead, we
have the idea that locals come first, so people from different
places fight with each other over the Internet.”

Forged Marriages

Previously, unmarried non-local residents were qualified to
buy a home as long as they worked and paid tax in the city for a
year, according to Lu Qilin, senior research manager at Deo
Volente Realty, Shanghai’s third-biggest property brokerage.
That changed after Wen ordered the crackdown.

Buyers could try forged marriage licenses, and the city
government is unlikely to check as long as they aren’t from
Shanghai, said Lu. Such licenses cost about 100 yuan, he said.

“Compared with what they pay for a property, this is small
money,” Lu said.

As prices rose last year, some couples faked divorce to
skirt the two-property limit.

In China, couples are typically wed in a formal process
that can be done at short notice, much like renewing a driver’s
license. The marriage is then celebrated at a banquet with
family and friends that marks society’s recognition of the union,
often months after the official event.

Deferring Marriage

The average age at which Shanghai residents get married has
climbed along with housing costs. Shanghai men averaged 32.45
years and females 29.89 years when they wed, according to the
city’s statistics bureau. That’s up from 28.64 years for males
and 26.43 years for females in 2007.

Shanghai’s home-price surge fueled concern a bubble was
arising and housing was becoming unaffordable. A standard two-bedroom apartment about 10 kilometers (6.2 miles) from
Shanghai’s center costs about 3 million yuan, versus an average
annual wage of 52,655 yuan.

China responded in April 2010 with policies to deter
speculators and curb price growth. It raised down-payment and
mortgage requirements, imposed property taxes for the first time
in Shanghai and Chongqing, increased building of low-cost social
housing, and implemented purchase restrictions in about 40
cities.

As nationwide prices eased in the nine months to May, the
government tolerated minor easing of curbs in some cities to
ensure economic growth didn’t slow too quickly. China’s economy
expanded 7.6 percent in the second quarter from a year ago, the
slowest pace in three years.

Sales Surge

China’s central bank cut interest rates in June for the
first time in three years, and lowered them again in July. Home
sales jumped 41 percent in June, according to government data.

The speed of the rebound prompted action. The central
government ordered local counterparts that had relaxed housing
policies to “strictly implement” them to prevent prices from
taking off again, the land and housing ministries said in a
jointly issued “urgent notice” on July 20. Real estate curbs
are still at a “critical stage,” the government said.

China sent eight teams to 16 provinces in late July to
check on the implementation of its property curbs, according to
a statement on the central government website on July 25. New
property curbs may result as the inspection teams return to
Beijing, the official China Securities Journal reported Aug. 9.

Pent-Up Demand

“Real demand is very hard to restrain; you can try
administrative measures, but demand from people is there,” said
Albert Lau, Shanghai-based China head and managing director at
London property broker Savills Plc. “Pent-up demand will be
released as soon as they see any positive signals, because
people need to live under a roof and get married.”

Premier Wen said easing inflation allows more room to
adjust monetary policy and positive signs are emerging in the
economy, the official Xinhua News Agency reported yesterday,
citing Wen’s comments during a two-day inspection tour to the
eastern province of Zhejiang.

The comments may bolster speculation China will cut banks’
reserve requirements or benchmark interest rates again after
inflation slowed to a 30-month low in July, export growth
collapsed and new yuan loans trailed estimates. A gauge tracking
property shares on the Shanghai Composite Index rose 0.1 percent
at the local close and is up 11 percent this year.

Zhao, the information-technology engineer who’s been dating
his girlfriend for three years, said he had been facing pressure
from her family to buy a home. He’s looking for an apartment,
priced around 1.5 million yuan, in eastern Shanghai near his
employer.

“I’ll now really have to calculate the timing: get a
marriage license right away when I see the right property,” he
said. “But that’s hard, isn’t it?”